The evaluation of the islamic banking experience emerging in Ethiopia

Islamic Banking is a banking system that is supposed to adhere to the Islamic Shariah principles while implementing financial transactions. The primary goal of Islamic banking is to provide financial services that benefit households and society while following Islamic ethical standards. The Islamic banking operations started in Ethiopia in 2013 through window-based interest-free services and as fully-fledged bases in 2020. This study assesses the emerging Islamic banking experience in Ethiopia, especially the newly established ones. The study further tries to look into the general performance of these banks, their future outlook, and the prominent opportunities and challenges that the institutions face. To collect data for the research an online survey questionnaire has been distributed to residents of Jigjiga City, Ethiopia, consisting of academics and specialists in Islamic Banking as well as the public. A total of 98 respondents participated in the study survey. The main findings of the study have shown that the public has a great level of confidence in the newly established Islamic banks' services and the banks can play a significant role in the economic development of the country. The results further revealed that the newly established Islamic banks have good customer service and can promote financial inclusion within the nation. Another finding of the study is that the banks are struggling with issues such as a lack of transparency, absence of public awareness, shortage of skilled staff, and regulatory challenges. The research findings seem to signify that there is an optimistic future for the Islamic banking industry in Ethiopia, and the newly established banks are generally performing effectively so far, even though they are facing some challenges, which is relatively ordinary for every novel industry. It is hence endorsed that the policymakers in Ethiopia should encourage these emerging financial industries that will potentially assist in the country's financial stability and economic prosperity.